How to raise a seed round

Question

Accepted Answer

To raise a seed round, understand that it's your first significant external financing, aimed at finding a scalable, repeatable business model and achieving product-market fit [3].

**Key Tactics:**
*   **Understand the Goal:** Raise enough capital to survive for 18-24 months while experimenting to find product-market fit [3].
*   **Show Traction:** You'll need a launched product with engaged users. For SaaS, this might be $10k-$25k in Monthly Recurring Revenue (MRR); for consumer apps, strong week-over-week user growth and high retention [4]. Evidence of early product-market fit is crucial, not just an idea [8].
*   **Target Investors:** Look for seed VCs, angel groups, and some pre-seed VCs doing follow-on rounds [4]. Angel investors and seed-stage VCs are common, and you'll typically need a lead investor [8].
*   **Typical Raise & Valuation:** Seed rounds typically range from $1.5M - $4M [4], or $2M - $5M in major tech hubs [5, 7]. Post-money valuations are often $8M - $15M [3].
*   **Manage Dilution:** Aim to sell 15%-25% of your company. Selling more than 25% can be a red flag for future rounds [3, 7, 8].
*   **Use Standard Instruments:** Almost always use a SAFE (Simple Agreement for Future Equity) or a convertible note [4]. Avoid handshake deals [8].
*   **Develop a Robust Product:** Use seed funds to develop a more robust product or MVP, conduct deeper market research, hire key early employees, and establish initial infrastructure [5].
*   **Prepare for Series A:** A substantial seed round means you might be front-loading milestones, setting a higher bar for traction needed for your Series A [5].